presentation material for the 3rd period · Ⅰ．overview of the 3rd period 4. occupancy rate and...

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3rd Fiscal Period（Dec. 2007）

Presentation Material

1

ContentsThe Progress of Japan Excellent Inc. p2

Ⅰ． Overview of the 3rd Period p31. Highlights

2.External Growth

3.Balanced and Diversified Portfolio

4.Occupancy Rate and Monthly Rent

5.Portfolio Administration

6.Financial Policies 1-3

7. Enhancement of Compliance and Risk Management

Ⅱ． 3rd Period Results p131. Summary

2. Income Statement

-Key Points

-Revenue and Expenditure by Property

3. Balance Sheet

4. Portfolio Appraisal Value

5. Unitholder Structure

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5

6

7

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12

14

15

16

17

18

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Ⅲ． Future Management Strategies p201. Operating Environment (1-2)

2.Basic Strategy

3.Targets to Consider for External Growth

-Geographic Balance

-Aiming for a Balance of Property Scale and Tenant Category

4. Internal Growth

-Status of Contract Renewals

-Rent Increase Potential

5. Performance Forecast

Appendix p29-Principal Strategies

-Sponsor Companies

-Cash Flow Statement / Profit Distribution

-JEI’s Portfolio / Portfolio Map

-Overview of 20 Assets

-Financial Indicators

-Unit Price Performance/

Outline of Asset Management Company

21

23

24

25

26

27

28

30

31

32

33

34

44

45

2

Asset Size expanded from JPY 98.3 Bn (14 assets) at the time of IPO to JPY 188.9 Bn (20 assets)

(*1) The shown asset scale is based on acquisition price.

(*2)The figures for asset scale, total acquired property value, and operation revenue have been rounded down to the nearest millions of yen.

The Progress of Japan Excellent Inc.

Acquisition of assets with high NOI yield as revenue base

Acquisitions at the time of IPO

Emphasis on asset balanced portfolio, through the acquisition of core asset in the portfolio, large-scale buildings located in central Tokyo

2nd and 3rd Period Acquisitions

2

Public OfferingNumber of Outstanding Investment Units increased to 154,550 units

Steady Increase in RevenuesFP1: JPY 4.7 Bn

FP2: JPY 5.5 Bn

FP3: JPY 6.9 Bn

3

Ⅰ．Overview of the 3rd Period

3

4

Number of Properties Total Acquisition PriceFP2: 18 properties JPY 139.1 Bn

↓ ↓

FP3: 20 properties JPY 188.9 Bn( 36% increase )

Rental Revenues

FP2 JPY 4,209 Mn

↓

FP3 JPY 4,259 Mn

・Public Offering： 19,000 units (Payment Date: July 11, 2007)

・Fixed Long-term Debt (%) at end of 3rd Period: 54%（Feb. 2008 72%)

・Shelf Registration for the issuance of Corporate Bonds

・Internal audit using outside consultant (completed in September 2007)

・Increased one more Supervisory Director(November 2007)

・Registration as an Investment Management Firm (November 2007)

Acquisition of AKASAKA INTERCITY and Kowa Kawasaki Nishiguchi Building

( Total Acquisition Price: 49.8 billion yen)

Internal Growth

Annualized Total Rental Revenues Increases: 2.4% （14 Asset base ）

Financial Strategy

・Public Offering

・Debt Financing for Asset Acquisition

・Fixation of Interest Rates

Compliance and Risk

Management

・ Internal Management Structure

・ Abiding to the Financial Instrumentsand Exchange Law

Ⅰ．Overview of the 3rd Period1. Highlights

External Growth

5

JEI acquired Large-scale buildings in favorable locations which are to be the core of the Portfolio in the future.JEI acquired Large-scale buildings in favorable locations which are to be the core of the Portfolio in the future.

Ⅰ．Overview of the 3rd Period2. External Growth

(*1) “Acquisition price” is the purchase price documented on the contract. Rounded to the nearest millions of yen. (*2) “Annual NOI” is based on the calculation of the net operating income by direct-reduction process, listed on the December 31, 2007 real estate appraisal report. The figures are rounded to the nearest millions of yen. (*3) “NOI yield” = annual NOI / acquisition price(*4) “Total floor space” is the total floor area of the building entrust indicated on the registry. If the building entrust is a proprietary part of a sectional ownership, the documented “total floor space” is that of the whole building. (*5) “Structure/Floors” is the main structure written on the registry of the building entrust. If the building entrust is a proprietary part of a sectional ownership, the numbers are the total structure and number of floors. S= Steel , SRC= Steel

framed re-enforced concrete(*6) “Completion date” is the newly built date at the time of registry.

AKASAKA INTERCITY (AREA I)

・Located in an internationally sophisticated area (Akasaka / Roppongi) next to the political and economic center.

・A prominent property developed by Kowa Real Estate, with environment-friendly design and advanced technology.

Kowa Kawasaki Nishiguchi Building (Area III)

・Located in an area undergoing large-scale development, with excellent access to Tokyo central area and Haneda Airport

・Distinguished large-scale development offering very large floor space

Structure/Floors S、SRC　B3F,29F

Completion date Jan. 28, 2005

Total Floor Space 73,061.33㎡

StandardFloor Space

approx. 550tsubo(1,818㎡)

Annual NOI 719mn yen

NOI yield 4.0%

Previous Owner Kowa Real Estate Co., Ltd.

Acquisition Price 17,857mn yen

Previous Owner Kowa Real Estate Co., Ltd.

Acquisition Price 32,000mn yen

Annual NOI 169mn yen

NOI yield 5.3%

Total Floor Space 61,856.92㎡

StandardFloor Space

approx. 600tsubo(1,983㎡)

Structure/Floors S、SRC　B2F,21F

Completion date Feb, 29, 1988

6

Ⅰ．Overview of the 3rd Period3. Balanced and Diversified Portfolio

(*1) Percentage of “Investment area”, “Building size”, and “Building age” are based on acquisition price.

(*2) Large-scale buildings (Tokyo’s 23 Wards) = Floor area of over 10,000 tsubos

Medium-scale buildings ( Tokyo’s 23 Wards) = Floor area of over 1,000 tsubos and under 10,000 tsubos

Large-scale buildings (outside Tokyo’s 23 Wards) = Floor area of over 4,000 tsubos

Medium-scale buildings (outside Tokyo’s 23 Wards) = Floor area of over 1,000 tsubos and under 4,000 tsubos

(*1) “End-tenant” is referred to lesses( excluding master lease agreements ) with JEI has direct lease contracts with, or trustees and sublesses with lease contracts master lease companies.

(*2) “PML” is the percentage of the re-construction cost to build back to its original state, in the case of an occurrence of a large-scale earthquake( The earthquake scale being one that would occur once every 475 years and the likelihood of it occuring within the next 50 years is 10%), to the total cost of construction cost to build the building.

(*3) “Appraisal gain” is the difference between total appraisal value (at end of the period) and the book value.

Acquisition of additional 6 assets led to securement of large-scaled buildings in Tokyo CBD as well as improved geographic diversificationAcquisition of additional 6 assets led to securement of large-scaled buildings in Tokyo CBD as well as improved geographic diversification

　　 Area lArea llArea lllArea lV

　　 Large BuildingsMid. Buildings

　　 Less than 10 years10 years - 20years20 years - 30yearsOver 30 years

Building age

Portfolio at end of FP2

(Jun. 30, 2007)


(Dec. 31, 2007)


(Dec. 31,2006)

Investment Area

Building Size

Number of properties: 18Total acquisition Price: 139.1 Total acquisition Price: 188.9

Number of properties: 20Number of properties: 14Total acquisition Price: 98.4

53.1％42.6％

4.4％

56.5％43.5％

Average 15.3years Average 13.8 years Average 14.1years

54.3％ 49.4％34.8％ 42.5％

7.9％

3.0％

5.8％

2.2％

69.2％ 77.3％

30.8％22.7％

86.7％ 70.8％ 69.1％

2.9％10.4％

2.1％ 1.5％10.4％ 7.6％

21.8％16.7％

6.5%

153.4Bn Yen(13.5Bn Yen)

37.3% 27.6% 27.3%

Appraisal Value

39.7%

6.3%

213.1Bn Yen(23.8Bn Yen)

53.0%

7.7%

107.7Bn Yen(8.8Bn Yen)（Appraisal gain)（*3)

42.7%

Ratio of major end tenants(Top 5 tenants)(*1)

Ratio of major end tenants(Top 10 tenants)(*1)

Portfolio PML (*2)

Portfolio at end of FP1 Portfolio at end of FP2 Portfolio at end of FP3

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＜賃料総額の推移＞

3,500

4,000

4,500

5,000

5,500

6,000

6,500

第1期第2期第3期

Steady Increase in the Total Rental Revenue (14 Asset basis)Maintaining a Stable Leased Space in Service Rate

Ever since its IPO, the overall portfolio occupancy rate has remained above 95%.

(*) Total Rental Revenue includes service fees but does not include any other revenues. The total rental revenues for FP1 are calculated on a bi-annual basis.

Ⅰ．Overview of the 3rd Period4. Occupancy Rate and Monthly Rent

New / Renewed

Rental fee revision total

Number of contracts 12 10 22

Rental area 998 tsubo 5,054 tsubo 6,052 tsubo

Average increase rate 17.5％ 8.6％ -

Results of new enticements and contract revisions

Rental revenues for the FP3 increased 2.4% per annum.(excluding assets acquired in and after the FP2.)

FP1 FP2 FP3

(JPY MM)

IPO:14 Assets

4,164millions of yen

4,259 millions of yen


③Internal growth factors＋JPY 51 MM

② Whole-period revenue

contributions ＋JPY 702MM

① External Growth Factors＋JPY 482 MM



3rd Period: 3 new Assets

2nd Period: 4 new Assets


0

70

75

80

85

90

95

100

Jun-06

Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

(%)

Total

Area l

Area ll

Area lll

Area Vl

(Area Ⅱ) JEI Nishi-honmachi BuildingThe lease contract with a major tenant expired in Nov.2007 and JEI did not extend nor entice new tenants due to asbesto removal work.

Total Rental Revenue

8

Revising the safety check list for tenants and promptly fixing areas that may be hazardous. Conducting tenant follow-up from the information obtained by accident reports from the property management company. Maximizing tenant satisfaction by building a structural plan in case of emergency.

JEI collaborates with the property management companies to secure management quality, as well as to balance service quality with property management and utility costs. JEI is also working to make use of the unused space to increase operating incomes.

JEI is making additional investments to increase asset values of its properties for the medium-to-long term.

Ⅰ．Overview of the 3rd Period5. Portfolio Administration

Measures taken to Reinforce the Safety of Properties

Reduction of Property Management Costs and Actions to Increase Revenues through internal growth

JEI Nishihonmachi Building: Example of Asbesto removal and office renewal

Mid-to-long Term Value-up Plan

Construction work in progress by one floor at a time. Tenants have been cooperative in relocating floors.

Besides asbesto removal, JEI improves ceiling hight, illuminance, and adding extra space to place power / communications code / cables

Schedule Office (5F) after Renewal work

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Ⅰ．Overview of the 3rd Period 6. Financial Policies (1)

With the proceeds from the public follow-on offering, JEI repaid a part of the JPY 39.1 Bn short-term loan which was used to acquire assets in FP2. JEI re-financed the rest of the short-term loan to long-term loans.

JEI also took out a short-term loan of JPY 49 Bn to acquire assets in FP3.

Public Follow-on Offering in July, 2007and Debt Financing for Asset Acquisitions

(billions of Yen)

Current Assets15.9 Current

Liabilities50.1

（Short-termloan　49.0）

Total Assets

Fixed Assets140.0

ＬＴＶ 51.3%

Current Assets16.3

CurrentLiabilities

39.9（Short-termloan　39.1）

ＬＴＶ 49.7%

Capital account69.8

（subscription67.6）

FixedLiabilities

46.6（Long-termloan　38.5）

156.3

（FP2）（FP3）

Total Assets 205.5

（follow-onacquistitionreal estate

portion 49.9）

FixedLiabilities

66.0（Long-termloan　56.5）

Fixed Assets189.6

（CapitalIncrease 19.4）

Capital account89.3

（subscription87.1）

（follow-onacquistitionreal estate

portion 41.3）

■Short term loan with additionnal acquisition１．Amount: 49.0Billion Yen　（2007/10/26）２．Term: 1year （2008/10/24）３．Lender: 5 banking facilities

■Refinancing of short-term loan into long-term loans１．Short-term loan 20.7 Billion Yen early repayment （2007/7/24）２．Long-term loans　 18.0 Billion Yen （2007/7/31）　① 5-year period:　　　Fixed interest　 7.0 Billion Yen Floating interest　7.0 Billion Yen　②7-year period　　　Fixed interest　 4.0 Billion Yen

■Follow-on public offer （PO) capital increase　①Total Investment Units Outstanding：19,000　②Offer price：1,019,200 Yen　③Total Offer price：19,364,800,000 Yen　④Issue price：984,360 Yen　⑤Total issue price：18,702,840,000 Yen　⑥Paid-in date：July 11, 2007

■3rd party allocation through Green Shoe Option　①Total Investment Units Outstanding：750　②Issue price：984,360 Yen　③Allocated to：Mizuho Securities Co., Ltd.　④Paid-in date：August 8, 2007

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Extending of borrowing periods, Balanced maturities(*1) The percentages have been rounded to the 1st decimal place.

Spread out of Financial InstitutionsEnd of 1st Period End of 3rd Period

The following actions were taken in order to secure financing capabilities and reduce re-finance risks

1.) Number of lenders（9⇒12） 2.) Extending borrowing periods 3.) Balanced maturities

Diversified Lenders and Maturities

Ⅰ．Overview of the 3rd Period6. Financial Policies (2)

23.4

7.8

7.8

19.5

13.0

13.0

7.8

5.2 2.6

Mizuho Corporate Bank 23.4%

The Dai-ichi Mutual Life Insurance 7.8%

Mizuho Trust & Banking 7.8%

Mitsubishi UFJ Trust and Banking 19.5%

The Norinchukin Bank 13.0%

Aozora Bank 13.0%

The Chuo Mitsui Trust and Banking 7.8%

Sumitomo Mitsui Banking 5.2%

Resona Bank 2.6%

32.7

4.7

9.018.8

11.6

7.6

6.6

2.81.41.91.90.9

Mizuho Corporate Bank 32.7%

The Dai-ichi Mutual Life Insurance 4.7%

Mizuho Trust & Banking 9.0%

Mitsubishi UFJ Trust and Banking 18.8%

Sumitomo Mitsui Banking 11.6%

Aozora Bank 7.6%

The Norinchukin Bank 6.6%

The Chuo Mitsui Trust and Banking 2.8%

Resona Bank 1.4%

Development Bank of Japan 1.9%

Sompo Japan Insurance 1.9%

Tokio Marine & Nichido Fire Insurance 0.9%

9 lenders

JPY 38.5Bn

12 lenders

JPY 105.5Bn

Sponsor CompaniesLenders that JEI made borrowings from during the FP3

0

5

10

15

20

25

30

35

40

45

50

FP4 FP5 FP6 FP7 FP8 FP9 FP10 FP11 FP12 FP13 FP14 FP15 FP16 FP17

Long-term borrowingsShort-term borrowings

Average Remaining Debt Term（End of FP3）

Total： 2.1 years

long-term loan：3.3 years

Bn Yen

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JEI has completed shelf registration of corporate bonds to prepare for financing opportunities.

Category Approximate processing amount Period

Corporate Bonds JPY 100 Bn January 7, 2008 to January 6, 2010

[Details of the Registration]

[Credit Ratings as of Dec.31, 2007]

Rating Institutions Content (outlook)

Moody’s Investors Service Issuer rating： A2 (stable)

R&I Issuer rating： AA- (stable)

Increased Ratio of Fixed Interest Rate Borrowings

Shelf Registration for Corporate Bonds

Ⅰ．Overview of the 3rd Period6. Financial Policies (3)

【At end of FP2】

Short Term/Floating Rate

39.1

【At end of FP3】【2008/1/25】（Billions of Yen）

Interest ratefixation of 50% oflong-term debt

Long Term /Floating Rate

19.25

Long Term/ FixedInterest19.25

Debt balance38.5

【At end of FP1】



19.25

Long Term /Fixed

Interest19.25

Debt balance77.6

Debt balance105.5

Debt balance105.5


49.0


26.25

Long Term /Fixed

Interest30.25


49.0


15.75

Long Term /Fixed

Interest40.75



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Ⅰ．Overview of the 3rd Period7. Enhancement of Compliance and Risk Management

Improved Internal Management Structure

Strengthening the Governance of JEI

Response to the Financial Instruments and Exchange Law

Procedure to register as an Investment Management Business Firm (November 14, 2007)

Training workshops conducted by outside professionals

Initiative to improve internal management structure completed under the guidance of an outside consultant (September 2007)

Strengthening the governance function by appointing an officer with certified real-estate appraiser as supervisory director

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Ⅱ．3rd Period Results

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Ⅱ．3rd Period Results1. Summary

Factors for increase in revenue and profit in FP3・ Full contribution from assets(4 assets) acquired in FP2・Contribution from assets (2 properties) acquired in FP3

Reason for increase in revenue and decrease in profit (14 asset basis)

Decrease in profit (JPY 202 MM）

・Property tax burden （50％→100％）

（increased by 157 MM）

・Repair and Maintenance fees （exterior wall repair, etc.）（increased by JPY 147 MM）

Excluding the reasons above, the increase in revenue and profit resulted from internal growth.

(*) The amounts have been rounded down to the nearest millions of yen.

The ratios are rounded to the nearest 1st decimal place.

Comparisons of FP2 and FP3

(millions of yen)

Amount ChangeRevenues 5,505 6,982 1,476 26.8%

Rental profits 3,096 3,544 447 14.5%Income before income taxes 2,240 2,421 181 8.1%

Net Income 2,239 2,420 181 8.1%

Distribution per Unit (JPY) 16,614 15,663 -951 -5.7%

DifferenceFP3FP2

(millions of yen)2 propertiesacquired in

FP3

4 propertiesacquired in

FP2

14 propertiesacquired in

FP1Total

Revenues 552 797 125 1,476Operating expenses 271 429 327 1,028Rental profits 281 368 -202 447

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Comparison between FP3 and FP2Revenues 26.8% increaseOperating Expenses 37.7% increaseOperating income 15.1% increase Income before income taxes 8.1% increase

100% of the property taxes for the 14 properties acquired in FP1 were imposed from FP3(FP2 percentage: 50%)

Increase in repair and maintenance costs (JPY 238 MM)-Tenant relocation costs due to the construction of the JEI Nishi-honmachi asbesto removal.

-Advancement of the mid-long term plan construction

Decrease in proportion against revenue from 6.0% to 5.3%(enjoying the benefits of the advantages accompanied by the

expansion in asset scale)

Increase in interest expenses ( JPY 172 MM )Primary reason for increase is the increase of principal （JPY 77,600 MM→JPY 105,500 MM）

2. Keypoints of the Income StatementⅡ．3rd Period Results

(*) The amounts are rounded down to the nearest millions of yen.

(millions of yen)

FP2 (%) FP3 (%) Difference

1. Revenues 5,505 100.0 6,982 100.0 1,476 Rental revenues 5,069 6,335 1,266 Other 436 647 2102. Operating Expenses 2,851 51.8 3,926 56.2 1,074 Property management costs and fees 859 1,083 223 Utilities 452 613 161 Property and other taxes 174 330 156 Insurance 19 22 3 Repairs and maintenance 124 363 238 Other 104 131 26 Depreciation 674 894 219Total property operating expenses 2,409 3,437 1,028Rental profits 3,096 3,544 447　 Asset management fees 328 369 41　 Other 114 118 4Operating Income 2,653 48.2 3,055 43.8 4013. Other Income 24 0.5 16 0.2 ▲ 7　　Interest income 7 13 5 Other 16 2 ▲ 134. Other Expenses 438 8.0 650 9.3 212 Interest expenses 361 533 172 Loan arrangement fees 46 76 29 New unit issueance costs 30 40 10 Other 0 0 0 Income before income taxes 2,240 40.7 2,421 34.7 181 Income taxes-current 0 1 0 Income taxes-differed 0 ▲0 ▲0Net Income 2,239 40.7 2,420 34.7 181Retained Earnings at beginning of period 0 0 ▲0Retained Earnings at end of period 2,239 2,420 181

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2. Revenue and Expenditure by Property

Not disclosed for No.36 Kowa, Kawasaki Higashiguchi, and Iidabashi buildings because end tenant consent has not been obtained.

NOI yield indications are annualized. NOI yield= NOI / acquisition price.The total NOI yield on an accounting basis is calculated based on the timing of the possession by the weighted average at acquisition.

(*) Fractional amounts of less than a million yen are rounded off. The second decimal place of percentages are rounded to the nearest first decimal place.

・NOI yield in FP3: 5.6% (accounting base)-NOI yield considering property taxes is 5.2% per annum.

・NOI yield decreased due to the following reasons. -Property tax burden on the assets obtained before FP3-Tenant relocation costs relating to asbesto removal at Nishi-honmachi building-Relatively low NOI yield for the 2 assets acquired in FP3

Ⅱ．3rd Period Results

Property tax burden by accounting base

Assets acquired in FP1： FP2: 50% FP3: 100%

6 Properties acquired in and after FP2： FP2: None FP3: None

millions of Yen

Ⅰ-1 Ⅰ-2 Ⅰ-3 Ⅰ-4 Ⅰ-5 Ⅰ-6 Ⅱ-1 Ⅲ-1 Ⅲ-2 Ⅲ-3 Ⅲ-4 Ⅲ-5 Ⅲ-6 Ⅲ-7 Ⅰ-7 Ⅱ-2 Ⅲ-8 Ⅳ-1 Ⅰ-8 Ⅲ-9

1,071 369 288 244 - 160 337 814 - 179 - 212 97 119 557 261 559 248 132 419 4,802 1,626 552 6,982

1,002 365 272 227 - 144 - 685 - 158 - 211 80 109 517 246 482 234 121 367 4,365 1,481 488 6,335

68 3 15 16 - 16 - 128 - 21 - 1 17 10 39 15 76 13 11 52 437 145 64 647

523 139 162 89 - 58 192 380 - 78 - 78 54 61 151 182 328 116 36 235 2,387 779 271 3,437

155 47 34 34 - 24 58 111 - 27 - 32 18 19 57 48 153 47 6 71 698 307 77 1,083

148 0 16 14 - 13 26 82 - 10 - 0 9 10 28 19 75 24 5 37 423 147 42 613

84 31 18 14 - 8 21 59 - 9 - 8 4 7 0 0 0 0 0 0 330 0 0 330

3 1 0 0 - 0 1 4 - 0 - 0 0 0 0 0 2 0 0 1 15 4 1 22

6 15 52 6 - 0 17 22 - 2 - 4 9 5 0 76 13 1 0 2 268 91 2 363

4 8 13 2 - 1 30 9 - 1 - 1 1 1 8 1 7 2 4 5 102 19 9 131

119 35 26 17 15 10 36 91 92 25 18 31 10 16 55 34 76 40 20 117 548 207 137 894

547 229 125 154 109 102 145 433 157 101 72 133 43 57 406 78 230 132 96 184 2,415 847 281 3,544

667 265 152 172 124 112 182 524 250 127 91 165 54 74 462 113 307 172 117 301 2,963 1,055 419 4,438

operated days 184 184 184 184 184 184 184 184 184 184 184 184 184 184 184 184 184 184 67 67

Acquisition price 22,552 9,450 8,350 5,040 4,000 2,859 4,300 13,890 10,976 5,400 4,023 3,905 1,150 2,550 23,300 6,673 6,470 4,238 17,857 32,000 98,445 40,681 49,857 188,984

5.9% 5.6% 3.6% 6.8% 6.2% 7.8% 8.4% 7.5% 4.5% 4.7% 4.5% 8.4% 9.3% 5.8% 3.9% 3.4% 9.4% 8.1% 3.6% 5.1% 6.0% 5.1% 4.6% 5.6%

5.9% 5.6% 3.6% 6.8% 6.2% 7.8% 8.4% 7.5% 4.5% 4.7% 4.5% 8.4% 9.3% 5.8% 3.7% 2.6% 8.0% 6.8% 3.4% 4.7% 6.0% 4.5% 4.2% 5.2%NOI Yield (Property tax beared Basis)

Rental Revenue

Profits

NOI

Other

14 properties acquired at IPO

TotalTotal of

4properties

Total of14

properties

4 properties acquired in FP2 2 propertiesacquired in FP3 Total of

2properties

Depreciation

Rental Income

Other

Repairs and maintenance

Property and other taxes

Rental Expense

Insurance

Property management cost &fees

Utilities

NOI Yield (Accounting Basis)

17

3. Balance SheetⅡ．3rd Period Results

(millions of yen)

ROA： 2.7％

ROE： 6.0％

Equity / total assets： 43.5％

Loan-To-Value： 51.3％

Book value per unit (BPS) ： Yen 577,758

Main Financial Indicators

(*1) The figures are rounded off to the nearest millions of yen. Thepercentages are rounded to the nearest 1st decimal place.

(*2) The Major financial indicators are calculated by below calculatingformulas.

ROA： Income before Income taxes / [Total assets at beginning of period +total assets at end of period) / 2]*100ROE： Net Income/[(Net assets at beginning of period + Net Assets at endof period) / 2]*100Equity / total assets: ( Equity / Total assets at end of period) * 100 LTV: ( Interest bearing debt at end of period / Total Assets at end ofperiod) * 100BPS： Net Assets at end of period / Number of outstanding InvestmentUnits

(*3) The ROA and ROE figures are calculated at an annual basis.

Difference DifferenceAssets % % Liabilities % %

Current Assets 16,282 10.4 15,930 7.8 ▲ 352 Current Liabilities 39,882 25.5 50,149 24.4 10,266

　 Cash and cash equivalents 5,223 2,440 ▲ 2,782 　 Accounts Payable - trade 447 753 305

　 Cash and cash equivalents (as Trust accounts) 10,096 12,146 2,049 　 Accounts Payable - others 308 280 ▲ 27

　 Rental Receivables 357 546 188 Short-term debt 39,100 49,000 9,900

　 Consumption taxes refundable 518 669 150 Other current liabilities 26 115 88

　 Other current assets 86 127 41 Long-term Liabilities 46,594 29.8 66,043 32.1 19,449

Fixed Assets 140,008 89.6 189,556 92.2 49,547 　 Long-term debt 38,500 56,500 18,000

　 Property and Equipment 131,304 84.0 180,758 87.9 49,454 　 Security deposits from tenants 516 466 ▲ 49

　　Real estate 3,125 3,103 ▲ 22 　Security deposits from tenants(as Trust accounts) 7,510 8,866 1,355

　 Real estate (as Trust accounts) 128,178 177,654 49,476 Derivative liabilities 67 211 143

　Construction in progress 0 0 - Total Liabilities 86,477 55.3 116,193 56.5 29,716

Intangible Assets 8,565 5.5 8,565 4.2 ▲0 Unitholders' Equity

　Leasehold rights 1,185 1,185 - Unitholders' Equity 69,881 44.7 89,503 43.6 19,622

　Leasehold rights (as Trust accounts) 7,380 7,380 - 　 Unitholders' capital 67,641 43.3 87,083 42.4 19,441

Other intangible assets 0 0 ▲0 　 Retained Earnings 2,239 2,420 181

Investments and Other Assets 138 0.1 232 0.1 93 　Unappropriated RetainedEarnings 2,239 1.4 2,420 1.2 181

Investment in securities 10 10 - Revaluation and translation adjustment ▲ 67 ▲ 0.0 ▲ 211 ▲ 0.1 ▲ 143

Security deposit 15 15 - 　 Loss on differed hedge ▲ 67 ▲ 211 ▲ 143

Long-term prepaid expenses 112 175 62 Total Unitholder’s Equity 69,813 44.7 89,292 43.5 19,478

Other - 30 30

Total Assets 156,291 100.0 205,486 100.0 49,194 Total Liabilities and Unitholders' equity 156,291 100.0 205,486 100.0 49,194

Assets Liabilities and Unitholders’ Equity FP2 FP3 FP2 FP3

18

Ⅱ．3rd Period Results4. Portfolio Appraisal Value

The portfolio appraisal value at the end of the FP3 was JPY 213.1 Bn.

The appraisal value of the 14 assets acquired at IPO has increased 6.0% from the previous period.

Unrealized profit (appraisal value-book value)End of 1st period: JPY 8.8 BnEnd of 2nd period: JPY 13.5 BnEnd of 3rd period: JPY 23.8 Bn

(millions of yen)

Name At the end ofFP1

①At the end of

FP2

②At the end of

FP3Mn yen ％ Mn yen ％ Mn yen ％

I-1 Omori Bellport D 22,553 23,230 23,710 25,630 1,920 8.1% 22,610 3,020 13.4% 22,709 2,921 12.9%

I-2 Shiba-2-chome Building 9,450 11,700 12,200 13,200 1,000 8.2% 9,480 3,720 39.2% 9,430 3,770 40.0%

I-3 Shuwa Daiichi Hamamatsucho Building 8,350 8,910 9,390 10,300 910 9.7% 8,410 1,890 22.5% 8,365 1,935 23.1%

I-4 No. 32 Kowa Building 5,040 5,251 5,462 5,676 214 3.9% 5,045 631 12.5% 5,030 646 12.8%

I-5 No. 36 Kowa Building 4,000 4,189 4,235 4,234 ▲ 1 0.0% 4,065 169 4.2% 4,049 185 4.6%

I-6 No. 28 Kowa Building 2,859 3,050 3,640 4,210 570 15.7% 2,870 1,340 46.7% 2,863 1,347 47.0%

I-7 Akasaka Garden city 23,300 - 23,500 25,700 2,200 9.4% 23,300 2,400 10.3% 23,319 2,381 10.2%

I-8 AKASAKA INTERCITY 17,857 - - 18,300 - - 18,000 300 1.7% 17,861 439 2.5%

II-1 NHK Nagoya Housou-Center Building 4,300 5,230 5,430 5,570 140 2.6% 4,580 990 21.6% 4,288 1,282 29.9%

II-2 ＪＥＩ Nishi-honmachi Building 6,674 - 6,760 6,760 0 0.0% 6,770 ▲ 10 -0.1% 7,026 ▲ 266 -3.8%

III-1 Musashikosugi Tower Place 13,890 16,700 17,700 18,300 600 3.4% 14,100 4,200 29.8% 13,751 4,549 33.1%

III-2 Kowa Kawasaki Higashiguchi Building 10,976 11,060 11,130 11,300 170 1.5% 11,020 280 2.5% 10,810 490 4.5%

III-3 Hongo TS Building 5,400 5,470 5,490 5,500 10 0.2% 5,440 60 1.1% 5,357 143 2.7%

III-4 Shuwa Iidabashi Building 4,023 4,190 4,510 4,940 430 9.5% 4,030 910 22.6% 4,048 892 22.0%

III-5 Kawasaki Nisshincho Building 3,905 4,830 5,220 5,790 570 10.9% 3,920 1,870 47.7% 3,906 1,884 48.2%

III-6 No.44 Kowa Building 1,150 1,350 1,610 1,840 230 14.3% 1,240 600 48.4% 1,052 788 74.9%

III-7 Ryogoku Dai-ichi Life Building 2,550 2,572 2,563 2,566 3 0.1% 2,551 15 0.6% 2,521 45 1.8%

III-8 Ebiina Prime Tower 6,470 - 6,550 6,610 60 0.9% 6,550 60 0.9% 6,666 ▲ 56 -0.8%

III-9 Kowa Kawasaki Nishiguchi Building 32,000 - - 32,300 - - 32,200 100 0.3% 32,019 281 0.9%

Ⅳ-１ Ⅳ Sendai kowa Building 4,238 - 4,309 4,462 153 3.6% 4,303 159 3.7% 4,244 218 5.1%

93,409 56,330 82,137 107,250 6,813 8.3% 93,780 13,470 14.4% 93,629 13,620 14.5%

10,974 5,230 12,190 12,330 140 1.1% 11,350 980 8.6% 11,314 1,015 9.0%

80,364 46,172 54,773 89,146 2,073 3.8% 81,051 8,095 10.0% 80,134 9,012 11.2%

4,238 - 4,309 4,462 153 3.6% 4,303 159 3.7% 4,244 218 5.1%

188,984 107,732 153,409 213,188 9,179 6.0% 190,484 22,704 11.9% 189,323 23,865 12.6%

98,446 107,732 112,290 119,056 6,766 6.0% 99,361 19,695 19.8% 98,179 20,877 21.3%

Difference（②-④）Appraisal value③

Appraisalvalue as ofacquisition

④Book value

at the end ofFP3

Difference（②-③)

II

Total

Area ll Total

Area l Total

Area lll Total

Area lV Total

(Total of primaly 14 properties)

III

No.

I

AcquisitionPrice

Difference（②-①）

Area

19

Ⅱ．3rd Period Results5. Unitholder Structure

(*) Figures for ownership ratio have been rounded to the second decimal place.

Ratio of investment units held by the 4 sponsors ： 13.3%

Sponsor company of the asset management company

1 Kowa Real Estate Co. Ltd. 14,312 9.32 Japan Trustee Services Bank, Ltd. (Trust account) 12,879 8.33 Trust & Custody Services Bank, Ltd. (Trust account) 11,281 7.34 NikkoCiti Trust and Banking Corporation (Trust account) 11,062 7.25 The Master Trust Bank of Japan, Ltd. (Trust account) 8,660 5.66 North Pacific Bank, Ltd. 4,573 3.07 JP Morgan Chase Goldman Sachs Trust Jasdec Rending Account 4,414 2.98 The Dai-ichi Mutual Life Insurance Company 4,132 2.79 The Bank of Ikeda, Ltd. 3,432 2.2

10 The Nomura Trust and Banking Co., Ltd. (Trust Account) 3,400 2.2

78,145 50.6

（％）NameRanking

Total

Unit held

Difference Difference

Individuals 1,923 87.7 3,358 90.6 2.9 4,058 3.0 7,260 4.7 1.7

Japanese financial institutions andsecurities companies 133 6.1 147 4.0 -2.1 84,318 62.6 101,908 65.9 3.3

Other Japanese corporations 57 2.6 96 2.6 0.0 20,920 15.5 20,985 13.6 -1.9

Foreign institutions andindividuals 80 3.6 107 2.9 -0.7 25,504 18.9 24,397 15.8 -3.1

Total 2,193 100.0 3,708 100.0 - 134,800 100.0 154,550 100.0 -

Unit

CategoryFP1 FP1FP2 FP2

Unitholder

# ofUnitholder

s(%)

# ofUnitholder

s

# ofUnits (%) (%)(%) (%) # of

Units (%)

20

Ⅲ．Future Management Strategies

20

21

< Metropolitan Tokyo Area>

●The office rental market in the Central Tokyo area continues to be in a favorable supply-demand condition, thus maintaining a high occupancy rate and high rent levels. The rent increase led by large-scale buildings in Central Tokyo, is spreading to small and medium sized building markets in the region and to the neighboring Metropolitan Tokyo area as well.

●On the other hand, since the beginning of early last fall, there seems to be a clear peakout in the rent markets ranging from the high 40,000 yen per tsubo to over yen 50,000 per tsubo which had been increasing at a high pace since early 2007.

< Osaka Area >

●Osaka area, mainly around Umeda Station has been in good supply-demand condition. However, rent has not increased except in some areas, although vacancy rate has been falling gradually.

< Nagoya Area >

●Unlike the new large-scale buildings in the Meieki area, the Nagoya area as a whole has not enjoyed the rental revenue increase. A few new buildings have decreased rents. In general, the market has not been able to absorb the supply from large-scale buildings. With further new supplies, it is expected that the rent level will peakout.

< Sendai Area >

●In the Sendai area, there has not been large enough demand to cope with huge supply. And rental market conditions have been getting worth rapidly. There is concern that the current situation may prolong.

< Other areas >

●Some cities show recovery in occupancy rate. However it did not lead to rent increase.

Management Environment - Office rental market Management Policies

Ⅲ．Future Management Strategies1.Operating Environment (1)

●While maintaining good relationships with existing tenants, JEI is trying to realize internal growth by active rent raise from existing tenants.

●JEI continues to invest in timely manner in order to maintain and strengthen competitiveness as well as to improve safety.

●JEI continues to realize external growth with top priority in Tokyo Central area (Area I). JEI continues to consider acquisition in the rest of Tokyo (non-Area I) and Metropolitan Tokyo area (Area III ).

●While targeting acquisitions of relatively new buildings, JEI tries to accumulate more mid-sized buildings to realize optimized balance between large and mid-sized buildings, considering rental market outlook.

●JEI may pursue opportunities to dispose assets, considering that rental market environment may change dramatically and become completely different from the current environment.

●JEI makes detailed analysis on rental market outlook and does not exclude any kind of solutions to properties with little internal growth potential.

●JEI actively pursues acquisition opportunities of properties not held by sponsors, using network to obtain information broadly, while making best use of pipeline support from core sponsors.

22

Ⅲ．今後の運用方針

●In the mid-to-long term, Japanese economy is in a growth trend. Prices of primary products are rising due to the economic growth in the emerging countries, and domestic prices of commodities are expected to rise as well.

●However, the trend of the global credit crunch caused by the sub prime turmoil affects the domestic economy, and it is difficult to predict the future financial policy of the Bank of Japan. Thus it can be presumed that both short and long-term debt interest rate will remain at the current level for the time being.

Management Environment- Financial Market

●In the metropolitan Tokyo area, real estate investment is still active. The real estate Investment yield to acquisition price continues to be low.

●In Osaka/ Nagoya area, real estate investment is in a mood of over-heat. However, rental market outlook becomes unclear and investment yield compression becomes slow. ●In other cities, asset sales have already been observed and the over-heated real estate investment market is cooling down. However there are no reductions in the acquisition prices yet.

●Long-term Debt Increasing the portion of fixed interest rate loans and extending borrowing periods, expecting trend of decreasing long-term interest rate.Considering issuance of corporate bonds as well.●Considering equity finance at an appropriate timing

Management Policies

Management Environment - Real Estate Investment Market

1. Operating Environment (2)Ⅲ．Future Management Strategies

23

2. Basic Strategy

JEI’s mid-long term target is to increase distributions.

We will improve profitability to achieve external growth and enforce proper fund-raising and corporate governance.

Internal Control

DisclosureExternal Growth

Financial Control

Internal Growth

Improved Internal ManagementDisclosure/ IR activities

Market Confidence(Decreasing Investment Risks)

Financial Strategies

Maximize Unitholder

Value

Increase in distribution

・Accurate understanding of the market environment

・Preparation for rising interest rates

・Holding LTV level between 35%-50%

・Improving of credit rating

Optimized Capital Strategy


⇒Medium-term Management target: Expansion of Assets to JPY 300 Bn

External Growth Strategies

Internal Growth Strategies

・Increasing rental income byportfolio expansion throughproperties provided by sponsorcompanies

・Diluting management feesthrough portfolio expansion

・Raising Rent levels

・Improving Occupancy Rates

・Reducing Management Fees

Increased Profitability

24


JEI considers geographic balance, with the 6 wards of Central Tokyo (Area I) to be the center of the portfolio, emphasizing the diversification of investments.

Area IArea I49.4%49.4%

AreaAreaⅡⅡ

5.8%5.8%

Area Area ⅢⅢ42.5%42.5%

Area Area ⅣⅣ2.2%2.2%

Area IArea I50%50%

AreaArea

ⅡⅡ

20%20%

AreaAreaⅢⅢ

25%25%

Area IVArea IV5%5%

JPY JPY 188188.9 Bn.9 Bn

JPY 300 BnJPY 300 Bn

Geographic Balance

<Current Status><Current Status> <Mid<Mid--term Target>term Target>

Current AssetsCurrent AssetsJPY 93.4 BnJPY 93.4 Bn

JPY 10.9 BnJPY 10.9 Bn


257億円

Current AssetsCurrent Assets

Current AssetsCurrent Assets

Current AssetsCurrent AssetsJPY 4.2 BnJPY 4.2 Bn

JPY 80.3 JPY 80.3

BnBn




(*) These percentages are a mid-term target and is subject to change.

Mid-term target for geographic Balance

3. Targets to Consider for External Growth－ Geographic Balance

25

The target ratio between large-scale buildings(*), being superior and competitive in the real estate market, and medium-scale buildings with high-liquidity and a stable rent revenue shall be 65% : 35%. We continue to aim for external growth.

LargeLarge--scale buildingsscale buildings77.3%77.3%

中型ビル

LargeLarge--scale scale

BuildingsBuildings65%65%

JPY 188.9 BnJPY 188.9 BnJPY 300 BnJPY 300 Bn

Property Scale Balance

<Current Status><Current Status> <Mid<Mid--term Goal>term Goal>

JEI will continue to seek risk diversification, such as prevention of portfolio concentration on a single tenant or a specific industry.

Tenant Balance

MediumMedium--scale scale

buildingsbuildings22.7%22.7%

MediumMedium--scale scale

BuildingsBuildings35%35%

Already acquiredAlready acquired

JPY 146.1 BnJPY 146.1 BnJPY 42.8 BnJPY 42.8 Bn

Ⅲ．Future Management Strategies3. Targets to Consider for External Growth- Aiming for a Balance of Property Scale and Tenant Category


JPY JPY 4242..88 BnBn

(*) The ratios for the property scale are a mid-term goal and is likely to change.

Property Scale balance target for the

medium-term

* Large-scale buildings (Tokyo’s 23 Wards)= Floor area of over 10,000 tsubosMedium-scale buildings ( Tokyo’s 23 Wards)=Floor area of over 1,000 tsubos and under 10,000 tsubosLarge-scale buildings (outside of Tokyo’s 23 Wards)=Floor area of over 4,000 tsubosMedium-scale buildings (outside of Tokyo’s 23 Wards)= Floor area of over 1,000 tsubos and under 4,000 tsubos

26

4. Internal Growth － Status of Contract Renewals

Almost all contracts are ordinary lease agreements with a period of 2 years or less.More than 80% of the contracts will face its first renewal within two years. (on a contract floor area basis)There are 15 term lease agreements: 5.5% on a floor area contract basis

Leasing Contract Patterns and Renewal Periods


Rent Renewal Status of Existing TenantsPercentage of rent increases(including the contract renewals within the period.)FP1: 6%, FP2: 31%, FP3: 32% Goal for FP4: 86% - of which 54% already agreed

Average increase ratio FP1: 3.7% FP2: 4.5% FP3: 8.6% FP4: Negotiating at 5.4~7.6%

(*) FP2 includes the 14 assets at IPO. The numbers for FP3 include the additionally acquired 4 assets, and FP3 includes the 2 assets acquired during FP3.

Lease Agreement Renewal Periods and Area

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Jun. 2012(FP12)

Dec. 2011(FP11)

Jun.2011(FP10)

Dec.2010(FP9)

Jun. 2010(FP8)

Dec.2009(FP7)

Jun.2008(FP6)

Dec.2007(FP5)

Jun.2007(FP4)

Area （㎡）

Next renewal

2nd or later

Over 80% of the Renewals will be within 2 years

Rent Revenue from Renewing Tenants（Including contracts revised during the contract period)

0.00 20,000.00 40,000.00 60,000.00 80,000.00 100,000.00 120,000.00

Jun. 2008（FP4）Estimate

Dec.2007（FP3）

Jun. 2007（FP2）

Dec. 2006（FP1）

Contract areas（㎡）

Increase No Change Decrease

6％

94％ 0％

31％ 69％ 0％

32％ 68％ 0％

(Settlement 54％) (Negotiating 32％)

Average Increase Ratio3.7％



86％ 14％

0％

Average Increase Ratio 7.6％ (5.4% including contracts under negotiation)＋22 million yen per month

＋4 million yen per month (Estimate)＋8 million yen per month

＋2 million yen per month

＋0.3 million yen per month

27End of FP3 (20 assets)

+JPY 184 MM（+16.5%）

In the future, the current negotiation targets will increase to

A revenue of 26 million yen / month

(Approximately 2.3% of the Total Rent Revenues)

・With the steady rental market, rent increase potential increased from 67% to 73% on an 18 asset basis (contracted area).・76% for the 20 assets.

Contracts with increase potential 73％

Contracts with Rent Increase Potential


・At the end of FP3, the growth potential was increased from 12.3% to 14.1% to balance the market rates.・On a monthly rental income basis, the growth potential including the newly acquired properties was from JPY 126 MM to JPY 184 MM.

Rent Increase Potential

+JPY 114 MM（+12.3%）

Market Price

Performance

FP2 (18 assets) FP3 (18 assets)

+JPY 126 MM（+14.1%）

Divergence Ratio for Current Rental Revenues and Target Market Rates

(*) Excluding residents, hotels, and sports gyms

(*) Excluding residence, hotels, and sports gyms

①

②

③

④

⑤

Divergence Ratio for Current Rent Assets and Target Market Rates

FP2 (18 assets) FP3 Assets (18 assets) End of FP3 (20 Assets)

①

②③

④

⑤

87％

End of FP3 (2 additional assets)

①

②⑤

End of FP3 (2 additional assets)

Market Price

Performance

+JPY 58 MM（+26.5%）

Negotiations in the future（40％）

Under negotiations

（24％）

Agreement（36％）

Currently negotiating（60％）

①

②

③

④

⑤<reference>

<reference>

Contracts with increase potential 76％

4. Internal Growth － Rent Increase Potential

Market Price

Performance

Market Price

Performance

①Over 20% below the market price ②10-20% below the market price ③10% below market price ④market price ⑤3% above the market price

67％

28

5. Performance ForecastⅢ．Future Management Strategies

(millions of yen)

<Assumption>No acquisitions and no equity finance and issuance of new investment units.

■ FP4 (June, 2008) projections・Increase in Operating revenues and income with the full-time contribution of the 2 assetsacquired in FP3.

・The costs for re-location of tenants for Nishi-honmachi building asbesto removal will reach a peak.■ FP5 (December, 2008) projections・Increase in property taxes and interest expenses, offset by rental revenue increase.

(*) Amounts are rounded down to the nearest millions of yen.

FP1(Dec.2006)

FP2(Jun. 2007)

FP3(Dec. 2007)

FP4 - Forecast(Jun. 2008)

FP5 - Forecast(Dec. 2008)

Revenues 4,751 5,505 6,982 7,810 8,086

ＮＯＩ 3,405 3,770 4,438 4,913 5,026

Operating Income 2,369 2,653 3,055 3,286 3,396

Income before income taxes 1,858 2,240 2,421 2,504 2,520

Net Income 1,856 2,239 2,420 2,503 2,519

Distribution per Unit (JPY) 13,773 16,614 15,663 16,200 16,300

Total Investment Units Outstanding (Units) 134,800 134,800 154,550 154,550 154,550

29

Appendix

-Principal Strategies

-Sponsor Companies

-Cash Flow Statement / Profit Distribution

-JEI’s Portfolio / Portfolio Map

-Overview of 20 Assets

-Financial Indicators

-Unit Price Performance

/ Outline of Asset Management Company

29

30

Usage（*1） Portfolio Ratio（*2）

Office Buildings Over 90%

Others（Commercial/Residential Area） Under 10%

Principal StrategiesJEI takes advantage of its sponsors whom have strengths in both real estate and financing, and aims to maximize unitholders’ investment value by pursuing the stabilization and expansion of revenues.

JEI will invest mainly in office buildings in metropolitan areas and operate its portfolio balancing revenue stability and expansion.

Assets

Debts

Equity

More than 90% of the portfolio are office buildings For offices, we have defined the “core areas” to be over 80% of the portfolio. We have set specific investment ratios for the breakout of core areas as well.

Core Sponsors

Pipeline Support Agreement

(*1) “Usage” refers to the major usage of each building.

(*2)Portfolio Ratio determined by the acquired price of assets.

Japan Excellent, Inc.Japan Excellent, Inc.

Asset

Liabilities

Equity

Finance SectorReal Estate Sector

Kowa Real Estate

Sekisui House

Morgan Stanley Capital K.K.

The Dai-ichi Bulding

Sohgo Housing

Mizuho Corporate Bank

The Dai-ichi Mutual Life Insurance

Mizuho Trust and Banking

Closely related with Mizuho Corporate Bank

Top class home- builder in Japan

The 2nd largest insurer in Japan

One of the 3 major financial groups in Japan

One of the 3 major financial groups in Japan

Investment target regions Investment ratio within

Core Areas More than 80％

Area ITokyo's six central wards(Chiyoda, Chuo, Minato, Shinjuku, Shinagawaand Shibuya Ward)

More than 50% of corearea

Area IICentral Osaka CityCentral Nagoya CityCentral Fukuoka City

Less than 50% of core area

AreaIII

Tokyo, excluding Tokyo's six central wards asArea I, and areas surrounding Tokyo (Kanagawa, Saitama, and Chiba Prefectures)

Less than 50% of core area

　

Area IVOsaka, Nagoya and Fukuoka Cities, excludingdistricts specified in Area II, and othergovernment-designated cities

Less than 20%

31

Maintaining a close relationship with Mizuho Corporate Bank, Ltd.Developing and operating offices and high-end rental apartments

2nd largest domestic life insurance company in Japan Holds 280 properties throughout Japan ( As of Dec.31, 2007)

Kowa Real Estate Co., Ltd.

The Dai-ichi Mutual Life Insurance Company

One of the leading housemakers in Japan. Expanding in large-scale urban development recently. Rokko Island City and Akasaka Garden City are developed by Sekisui House.

Sekisui House, Ltd.

Combination of 8 sponsor companies with Strengths in real estate and finance have supported JEI with asset acquisition, key personnels, operational know-how, and funding.

Sponsor Companies

Morgan Stanley Capital K.K.

The Dai-ichi Building Co., Ltd.

Sohgo Housing Co., Ltd.

Mizuho Corporate Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.

Core Sponsor

Pipeline Support 40.7%

Core Sponsor

Core Sponsor

Pipeline Support 12.3%

31.4%

9.4%

Pipeline Support

2.0%

： % of total portfolio

Shiba 2-Chome Building (Ⅰ-2）( Please view The Dai-ichi Mutual Life Insurance Company list of properties for photo. )

%

Ⅰ-1 Ⅰ-2

Ⅰ-3

Ⅰ-4 Ⅰ-5 Ⅰ-6

Ⅰ-7

Ⅰ-8

Ⅱ-1 Ⅲ-1

Ⅳ-1Ⅲ-2

Ⅲ-3 Ⅲ-4

Ⅲ-5 Ⅲ-7Ⅲ-8

Ⅲ-9

32

Cash Flow Statement / Profit Distribution

Cash Flow Statement(millions of yen)

Profit Distribution(yen)

Distribution Payout 99.9％

Distribution yield at end of Period 3.5％

(*) Amounts are rounded off to the nearest millions of yen.

Main Financial Indicators

Dividend payout ratio is rounded to the first decimal place.

Dividend yield is based on the closing price of the investment units on Dec. 28, 2007.

AmountCash flows from operating activities 3,213

　 Income before income taxes 2,421

　 Depreciation and amortization 894

　 Consumption tax refundable △ 150

　 Interest income and interest expenses △ 440

　 Other 488

Cash flows from investing activities △ 48,983

Purchase of real estate △ 50,289

Proceeds from security deposit from tenants 1,306

Cash Flows from Financing Activities 45,037

　 Proceeds from long-term debt 67,000

Outlays for repayment of debt △ 39,100

Issuance of new investment units 19,441

Cash distribution △ 2,238

Other △ 65

Net increase in cash and cash equivalents △ 732

Cash and cash equivalents at beginning of period 15,319

Cash and cash equivalents at end of period 14,586

Category

Retained earnings 2,420,792,942

Cash distribution 2,420,716,650

Distribution per unit 15,663

Retained earnings carried forward tothe next period 76,292

Total investment units outstanding 154,550 units

33

(*1) “Total floor area” is the total floor area of the building or the building entrust (excluding area of accessory buildings) listed on the registry. If the building or the building entrust is a proprietary part of a compartmentalized ownership, the total area is listed.

(*2) “Construction Date” is the newly built date on the registry.(*3) Figures for “Acquisition Price” are prices recorded in sales agreements ( excluding taxes). Amounts of less than one million yen are rounded. (*4) “Appraisal value” at the end of FP3 refers to the appraisal value listed on the real estate appraisal value report prepared by the real estate appraiser of Japan Real Estate Institute, Chuo Real Estate Appraisal Co., Ltd., and Hiro

and Reas network, Inc. at the end of the FP3.(*5) “Ratio” figures show the ratio of the acquisition price for each acquired property in proportion to the total acquisition price for all acquired properties in the portfolio. Figures are rounded to the first decimal place. (*6) The figures for PML is written based on the property survey report including the PML appraisal report. These figures are an opinion of the reporter and accuracy is not guaranteed by JEI.

JEI’s Portfolio

Overview of 20 Assets-JEI’s Portfolio / Portfolio Map

Portfolio Map

Acquisition price

Ⅰ-7 Office Akasaka Garden City Akasaka, Minato Ward, Tokyo 46,776.76 January 31, 2006 23,300 25,700 12.3 8.6

Ⅰ-1 Office Omori Bellport D Minami-Oi, Shinagawa Ward, Tokyo 155,778.75 September 24, 1996 22,553 25,630 11.9 8.0

Ⅰ-8 Office AKASAKA INTERCITY Akasaka, Minato Ward, Tokyo 73,061.33 October 26, 2007 17,857 18,300 9.4 9.2

Ⅰ-2 Office Shiba 2-Chome Building Shiba, Minato Ward, Tokyo 19,518.15 March 17, 1994 9,450 13,200 5.0 8.2

Ⅰ-3 Office Shuwa Daiichi Hamamatsucho Building Hamamatsucho, Minato Ward, Tokyo 8,327.53 December 16, 1991 8,350 10,300 4.4 8.2

Ⅰ-4 Office No.32 Kowa Building Minami-Azabu, Minato Ward, Tokyo 10,110.96 March 19, 1979 5,040 5,676 2.7 13.2

Ⅰ-5 Office No.36 Kowa Building Sanbancho, Chiyoda Ward, Tokyo 8,266.55 September 30, 1982 4,000 4,234 2.1 13.2

Ⅰ-6 Office No.28 Kowa Building Gotanda, Shinagawa Ward, Tokyo 6,282.23 February 21, 1975 2,859 4,210 1.5 13.5

328,122.26 - 93,409 107,250 49.4 -

Ⅱ-2 Office JEI Nishi-Honmachi Building Nishi Ward, Osaka City, Osaka 15,800.31 February 19, 1988 6,674 6,760 3.5 11.5

Ⅱ-1 Office NHK Nagoya Housou-Center Building Higashi Ward, Nagoya, Aichi 80,809.95 July 3, 1991 4,300 5,570 2.3 11.9

96,610.26 - 10,974 12,330 5.8 -

Ⅲ-9 Office Kowa Kawasaki Nishiguchi Building Saiwai Ward, Kawasaki City, Kanagawa 61,856.92 February 29, 1988 32,000 32,300 16.9 7.9

Ⅲ-1 Office Musashikosugi Tower Place Nakahara Ward, Kawasaki City, Kanagawa 53,711.13 July 15, 1995 13,890 18,300 7.3 11.5

Ⅲ-2 Office Kowa Kawasaki Higashiguchi Building Kawasaki Ward, Kawasaki City, Kanagawa 31,009.62 April 30, 1988 10,976 11,300 5.8 6.7

Ⅲ-8 Office Ebina Prime Tower Chuo, Ebina City, Kanagawa 55,806.20 May 31, 1995 6,470 6,610 3.4 12.2

Ⅲ-3 Office Hongo TS Building Hongo, Bunkyo Ward, Tokyo 5,877.11 February 6, 1991 5,400 5,500 2.9 14.2

Ⅲ-4 Office Shuwa Iidabashi Building Koraku, Bunkyo Ward, Tokyo 5,083.77 October 31, 1988 4,023 4,940 2.1 12.9

Ⅲ-5 Office Kawasaki Nisshincho Building Kawasaki Ward, Kawasaki City, Kanagawa 22,141.60 April 24, 1992 3,905 5,790 2.1 14.7

Ⅲ-7 Office Ryogoku Dai-ichi Life Building Ryogoku, Sumida Ward, Tokyo 5,820.56 August 8, 1996 2,550 2,566 1.3 14.3

Ⅲ-6 Office No.44 Kowa Building Higashiyama, Meguro Ward, Tokyo 3,359.55 July 31, 1984 1,150 1,840 0.6 13.4

244,666.46 - 80,364 89,146 42.5 -

Ⅳ-1 Office Sendai Kowa Building Aoba Ward, Sendai City, Miyagi 18,564.45 August 20, 1979 4,238 4,462 2.2 9.2

18,564.45 - 4,238 4,462 2.2 -

687 ,963 .43 188 ,984 213 ,188 100 .0 6 .3

AcquisitionPrice

(MM Yen)

Floor Space（㎡）

ＰＭＬ（％）

Ratio（％）

CompletionDate

AppraisalValue

(MM Yen)

Total

Type Name LocationAsset

Subtotal

Subtotal

Subtotal

Subtotal

34

Overview of 20 Assets- AKASAKA INTERCITY, Akasaka Garden City

Akasaka Garden City

Location 4-15-1, Akasaka, Minato-Ward, Tokyo

Land Area 6,888,97m2

Floor Space 46,776.76m2

Structure S, RC, SRC

Floors 19F, B2F.

Completion January 31, 2006

Ⅰ‐７AKASAKA INTERCITY

Location 1-11-44, Akasaka, Minato-Ward, Tokyo

Land Area 8,019.87m2


Structure S, SRC

Floors 29F, B3F

Completion January 28, 2005

Ⅰ‐８

35

Overview of 20 Assets- Shiba 2-Chome Building, No.32 Kowa Building

Shiba 2- Chome Building

Location 2-6-1 Shiba, Minato Ward, TokyoLand Area 3,355.00m2


Structure Offices: S, SRC, RC Residential: SRC

Floors Offices: 12F, B2FResidential: 14F

Completion March 17, 1994

Ⅰ‐２Sendai Kowa Building

Location 2-4-1 Ichiban-cho, Aoba Ward,

Sendai City, Miyagi

Land area 2,715.39m2

Floor area 18,564.45m2

Structure S, SRC construction

Floors 15F, B2F

Completion August 20, 1979

Ⅰ‐４

36

Overview of 20 Assets- Shuwa Daiichi Hamamatsucho Building, Omori Bellport D

Shuwa Daiichi Hamamatsucho Building

Location 2-2-12, Hamamatsucho,Minato Ward,Tokyo



Structure SRC, SFloors 8F, B1FCompletion December 16, 1991

Ⅰ‐３Omori Bellport D

Location 6-26-3 Minami-Oi, Shinagawa Ward Tokyo

Land Area 22,294.51m2Floor Space 155,778.75m2Structure S, RC, SRCFloors 17F, B3FCompletion September 24, 1996

Ⅰ‐１

37

Overview of 20 Assets- NHK Nagoya Housou-Center Building, JEI Nishi-Honmachi Building

NHK Nagoya Housou-Center Building

Location 1-13-3 Higashisakura, Higashi WardNagoya City, Aichi



Structure SRC, S

Floors 22F, B4F

Completion July 30, 1991

Ⅱ‐１JEI Nishi-Honmachi Building

Location 1-3-15, Awaza, Nishi-Ward

Osaka City, Osaka



Structure SRC

Floors 11F, B1F

Completion February 19, 1988

Ⅱ‐２

38

Overview of 20 Assets- Kowa Kawasaki Higashiguchi Building, Kowa Kawasaki Nishiguchi Building

Kowa Kawasaki Higashiguchi Building

Location 1-53 Nisshin-cho, Kawasaki Ward, Kawasaki City, Kanagawa



Structure S, SRCFloors 21F, B3FCompletion April 30, 1988

Ⅲ‐２Kowa Kawasaki Nishiguchi Building

Location 66-2, Horikawa-cho, Saiwaiku,Kawasaki City, Kanagawa

Land Area 8,196.21㎡

Floor Space 61,856.92㎡

Structure S, SRC

Floors 21F, B2F


Ⅲ‐９

39

Overview of 20 Assets- Musashikosugi Tower Place, Kawasaki Nisshin-cho Building

Musashikosugi Tower Place

Location 1-403 Kosugi-Cho, Nakahara Ward, Kawasaki City, Kanagawa



Structure S, SRCFloors 23F, B2FCompletion July 15, 1995

Ⅲ‐１Kawasaki Nisshincho Building

Location 7-1 Nisshincho, Kawasaki Ward,Kawasaki City, Kanagawa



Structure S, SRC

Floors 15F, B2F

Completion April 24, 1992

Ⅲ‐５

40

Overview of 20 Assets- Ebina Prime Tower, Sendai Kowa Building

Ebina Prime Tower

Location 2-9-50 Chuo, Ebina City, Kanagawa



Structure S, SRC, RC

Floors 25F, B1F

Completion May 31, 1995

Ⅲ‐８Sendai Kowa Building

Location 2-4-1 Ichiban-cho, Aoba Ward,

Sendai City, Miyagi

Land area 2,715.39m2

Floor area 18,564.45m2

Structure S, SRC construction

Floors 15F, B2F

Completion August 20, 1979

Ⅳ‐１

41

Overview of 20 Assets- No.36 Kowa Building, No.28 Kowa Building

No. 36 Kowa Building

Location 5-19 Sanbancho, Chiyoda-Ward, Tokyo


Floor Area 8,266.55m2

Structure SRC

Floors 7FL, B1F

Completion September 30, 1982

Ⅰ‐５No. 28 Kowa Building

Location 2-20-1 Nishi Gotanda, Shinagawa Ward, Tokyo

Land Area 925.13m2


Structure SRC

Floors 10F, B1F


Ⅰ‐６

42

Overview of 20 Assets- Hongo TS Building, Shuwa Iidabashi Building

Hongo TS Building

Location 2-38-6 Hongo, Bunkyo-Ward, Tokyo

Land Area 984.89m2


Structure SRC

Floors 8F, B1F


Ⅲ‐３Shuwa Iidabashi Building

Location 2-3-19, Koraku, Bunkyo Ward, Tokyo

Land Area 904.38m2


Structure SRC

Floors 8F, B1F

Completion October 31, 1988

Ⅲ‐４

43

Overview of 20 Assets- No.44 Kowa Building, Ryogoku Dai-ichi Life Building

No. 44 Kowa Building

Location 1-2-7, Higashiyama, Meguro Ward, Tokyo

Land Area 699.87m2


Structure SRC

Floors 9F

Completion July 31, 1984

Ⅲ‐６

Ryogoku Dai-ichi Life Building

Location 3-25-5, Ryogoku, Sumida Ward, Tokyo

Land Area 968.33m2


Structure S/SRCFloors 11F, B2FCompletion August 8, 1996

Ⅲ‐７

44

Financial Indicators

(*) The ratios excluding the distribution payout ratio are rounded to the nearest 2nd decimal place.

The ROA and the ROE is calculated by averaging the total assets and net assets at the beginning and end of the period.

The calculations are made out by counting the number of operation days as 181 days for the 2nd period and 184 days for the 3rd period.

Financial Indicator Calculation Unit FP2 FP3EPS（Earnings Per Share） Net Income / Total Units Outstanding Yen 16,614 15,784EBIT(Earnings Before Interest and Tax） Earnings Before Taxes ＋Interest・Discount Amount Mn Yen 2,601 2,955EBITDA（Earnings Before Interest, Tax andDepreciation and Amortization）

Earnings Before Taxes + Interest・Discount Amount + Depreciation and Amortization Mn Yen 3,276 3,849

NOI（Net Operating Income） Lease Revenue - Lease Expenses + Depreciation and Amortization MM Yen 3,770 4,438NCF（Net Cash Flow） NOI - Capital Expenditures MM Yen 3,588 4,118FFO per Unit FFO / Total Units Outstanding Yen 21,616 21,447DSCR（Debt Service Coverage Ratio） Net Income before InterestTax・Depreciation & Amortization/（Interest + Principal） Multiple 7.2 5.5ROA Income before income taxes / ([period beginning total assets + period end total assets] / 2) *

100 ％ 1.7 1.3　（Reference）

　　Annualized with following formulaAbove * 365 days / number of operating days ％ 3.3 2.7

ROE Net income / ([Net assets at beginning of period +Net assets at end of period] / 2) * 100 ％ 3.2 3.0　（Reference）

　　Annualized with following formulaAbove * 365 days / number of operating days ％ 6.5 6.0

Equity / Total Assets (Period end net assets / period end total assets) * 100 ％ 44.7 43.5LTV (Loan-to-Value） (Period end interest-bearing debt / period end total assets) * 100 ％ 49.7 51.3BPS（Book Value per Unit） Period end net assets / number of outstanding investment units Yen 517,906 577,758Distribution Payout Ratio Total cash distribution amount / net income * 100 ％ 100.0 99.9

45

Unit Price Performance / Outline of Asset Management Company

Investment Unit Price and TSE J-REIT Index

Executive DirectorExecutive Director

Investment

Planning D

ept.

Investment

Planning D

ept.

Real E

state M

anageme

nt Dept.

Real E

state M

anageme

nt Dept.

Real E

state Investm

ent D

ept.

Real E

state Investm

ent D

ept.

Corporate

Planning D

ept.

Corporate

Planning D

ept.

Business

Managem

ent D

ept.

Business

Managem

ent D

ept.

Finance and

Accounting D

ept.

Finance and

Accounting D

ept.

AuditorAuditor

Compliance Committee

Compliance Committee Investment

CommitteeInvestment Committee

Compliance OfficerCompliance Officer

Shareholders’ MeetingShareholders’ Meeting

Real Estate Investment Div.Real Estate Investment Div.Planning and Management Div. Planning and Management Div.

Board of DirectorsBoard of Directors

Corporate Name Japan Excellent Asset Management Co., Ltd. Headquarter 1-9-20 Akasaka, Minato-ku, TokyoEstablished April 14, 2005Capital 450 Million Yen

Kowa Real Estate Co., Ltd. 40.0%The Dai-ichi Mutual Life Insurance Company 20.0%Sekisui House Ltd. 15.0%The Dai-ichi Building Co., Ltd. 5.0%Sohgo Housing Co., Ltd. 5.0%Morgan Stanley Capital K.K. 5.0%Mizuho Corporate Bank, Ltd. 5.0%Mizuho Trust & Banking Co., Ltd. 5.0%President Junichi TamuraDirector of Planning & Management Nobuyuki TanabeDirector of Real Estate Investment Ryuichi YamamotoDirector （Non-executive） Takashi UchidaAuditor （Non-executive） Masatoshi TamaruCompliance Officer Michiro Ezaki

Business Operations

Financial Instrument DealerInvestment Management Business： Director-General of Kanto local financial bureau No. 331Discretionary License： Minister of MLIT No. 44Real Estate Agency License：　 Governor of Tokyo（1） No. 84511

Company Outline

Shareholders

Officers

TSE J-REIT Index

JEI Unit Price

Unit price (Thousand of Yen) TSE J-REIT Index

Jun. 27,2006

(IPO)

Dec.2006 Dec.2007Jun. 2007

Outline and Organization of JEAM

46

This material is provided for informational purposes only. It is not intended for the purpose of offer to sell or solicitation of offer to buy any securities, make any investment in, or as a recommendation to purchase or sell, any specific securities or products.

Information included in this material other than those concerning past or present facts constitutes forward-looking statements. However, actual future results could differ materially from such forward-looking information, due to known and unknown risks, uncertainties and assumptions.

We do not undertake the accuracy and completeness of information included in this material. Please be aware that these information may change without prior notice.

All copyrights and other rights with respect to this material belong to us.

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